Gold Prices Jump Over 2% After NFP Release
Spot gold prices surged on Thursday (February 7th) after the release of the weaker-than-expected US employment report for June. This data has led investors to lower their expectations for a Federal Reserve interest rate hike this year.
According to the CME FedWatch Tool, market participants now estimate a 51% chance of a September rate hike. This figure is down from 66% before the employment data release, indicating that the market is beginning to consider the Fed's likelihood of being more cautious in its policy actions.
At 9:33 a.m. Eastern Time (13:33 GMT), spot gold prices surged 2.4% to US$4,126.75 per ounce. Meanwhile, gold futures contracts rose 1.45% to US$4,142.42 per ounce.
The US Bureau of Labor Statistics reported that the economy added only 57,000 nonfarm jobs in June. This figure is well below the market consensus of 114,000 and a slowdown from the downwardly revised 129,000 in May. The data also follows the previous ADP report, which showed US private sector hiring increased less than expected.
Despite the weak June data, Morgan Stanley analysts believe the US labor market remains generally quite solid. They said this indicates the labor market has rebounded from last year's period of weakness. However, for gold, this latest data remains a positive catalyst because it dampens expectations of interest rate hikes and reduces the attractiveness of the US dollar.
Looking ahead, the market will continue to monitor whether the resilience of the US labor force is strong enough to allow the Fed to raise interest rates again this year. Meanwhile, moderate oil prices following the interim US-Iran peace deal have helped ease inflation concerns, although the risk of energy price pressures from the Middle East conflict has not completely disappeared.
Source: Newsmaker.id
